The US and Chinese global trade imbalances are increasing sharply. This makes it considerably harder to reduce unemployment and achieve a sustainable recovery in the United States. China's currency remains substantially undervalued, importantly due to that country's massive intervention in the foreign exchange markets, and is a major cause of its large and growing trade surplus. It has risen by less than 1 percent since the announcement of a "new policy" in June 2010. China let its exchange rate rise by 20 to 25 percent during 2005–08. Our goal should be to persuade it to permit a similar increase over the next two to three years. This would reduce China's global current account surplus by $350 billion to $500 billion and the US global current account deficit by $50 billion to $120 billion.